I'm going to take a bit of a different tack here. It's frowned on to say that not every one is good at officiating, but that's a fact and I think that's part of the issue the OP wants to know about. I think it's a fair question.
Yes, I might waive off a flag if i KNOW it's a bad flag. The party line is to say that all calls are good and officials need to defend one another. For the most part that's true, but in the interest of honesty, I'm going to say there are occassions when that's not the case and I promise I know better than anyone else in the stadium what the shortcomings migh be. And when there are bad flags, I have a pretty good idea. I won't officiate another guy's game (I have my own job) but I'll be ready for issues to arise. I've worked with guys who make me want to throttle them. For instance, I know how to call holding (I think it really takes 10 years to fully know how to call holding, by the way) and I have roughly 10 holding flags a season. Then some dude has five in the first half???? Something isn't right. So I'm on the alert, as is the rest of the crew, to watch a little more in his area and come togethr to talk about flags. I had a game one night with a guy who was making the whole crew look like idiots. He was just coming up with stuff. And when I trailed a runner into his area and he dropped a flag by two players who barely touched each other, I waived it off.
It's rare that happens because I think the official is blatantly wrong, but it's happened. More likely is this real-life scenario: I was trailing a play into the boundary once when the players, still engaged a yard or so out of bounds, went down and the line judge had a flag unnecessary roughness--a tackle wel out of bounds. However, I could see they were both holding each other and the offensive player tripped, which brought the defender on top of him. We talked and I waived it off. I had important info which, as VAOfficial points out, is often necessary.
Some referees waive off flags for things like unsportsmanlike conduct because they don't think it should be called in a certain situation or the offense doesn't meet their personal definition of USC, but I do not like treading that path.
If an official comes to me to report a foul that happened well away from him, I don't usually have a problem with that, VAOfficial does a great job spelling out many not-so-obvious details of administering a game. Like players, officials have keys. When my son was playing JV, I once suffered through the experience of sitting in the stands. My son's team was flagged for a block in the back by a back judge 30 yards from the block. The blocker who cmmitted the IBB was the back judge's key. He tossed his flag to the spot that was a lot closer to the line judge. Of course, a couple dads went crazy, but the call was made by the guy whose job it was to look at the player committing the foul. The dads lost their minds, cussing and roaring about how bad the official was. It was an embarrassing display. (And that's why I sat by myself at the field house during every other game.)